2018 (8) TMI 1664 - AT - Central Excise

Valuation - inclusion of handling charges in the assessable value - demand raised in SCN alleging that the appellant has received additional consideration in the form of handling charges and that such amount has to be included in the assessable value - Scope of SCN - Held that - The authorities below have categorically held that such charges are nothing but transportation charges from the assessee s factory to the consignment agent. The place of removal being the premises of the consignment agent, the transportation charges if any, from the factory to the consignment agent cannot form part of the assessable value. Since there is a fundamental difference in the allegation raised in the show cause notice as well as the confirmation of demand, the demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Inclusion of handling charges in the assessable value while clearing final products.
2. Allegation of suppression of facts and limitation period.

Analysis:
1. The case involved the appellants engaged in manufacturing Ibuprofen and its derivatives, who were issued a show cause notice alleging non-inclusion of handling charges in the assessable value while clearing final products. The original authority confirmed the demand, interest, and penalties, which was upheld by the Commissioner (Appeals). The appellant argued that the show cause notice did not clarify whether the demand was on handling charges to be included in the transaction value or transportation charges for transporting goods to the consignment agent. The authorities below held that the charges were transportation charges from the factory to the consignment agent, not to be included in the assessable value. The appellant contended that the department's assumption was based on credit notes issued by the buyer, and there was no evidence of the appellant collecting handling charges. The Tribunal found a fundamental difference between the allegation in the show cause notice and the confirmation of demand, leading to the demand being set aside, and the appeal being allowed.

2. The appellant also argued on the ground of limitation, stating that the period involved was from 2005-2006, and the show cause notice issued in 2008 alleged suppression of facts. The figures for raising the demand were taken from the appellant's accounts, indicating no suppression of facts. The Tribunal considered this argument along with the main issue of inclusion of handling charges in the assessable value. The respondent supported the findings in the impugned order, but the Tribunal, after hearing both sides, concluded that the demand could not be sustained due to the fundamental difference in the allegation raised in the show cause notice and the actual nature of the charges. As a result, the impugned order was set aside, and the appeal was allowed with consequential relief, if any.